Asset Ownership of Households: 1993

Transcription

1 CURRENT POPULATION REPORTS Household Economic Studies P70-47 Asset Ownership of Households: 1993 The Survey of Income and Program Participation by T.J. Eller and Wallace Fraser U.S. Department of Commerce Economics and Statistics Administration BUREAU OF THE CENSUS

2 Highlights x Median net worth, as measured in the Survey of Income and Program Participation (SIPP), for households in 1993 was $37,587 (± $1,250), not significantly different from the 1991 median household net worth of $38,500 (± $1,387) (in 1993 dollars). x Median home equity for households whose householders owned their own homes increased between 1991 and 1993 from $43,070 (± $1,738) in 1991 (in 1993 dollars) to $46,669 (± $1,153) in x During the period 1991 to 1993, there were declines in the median values of interest-earning assets at financial institutions, other interest-earning assets, rental property, vehicles, and businesses or professions. These declines were offset by increases in the median values of stocks and mutual fund shares, home equity, and U.S. savings bonds. The median value of holdings in checking accounts, other real estate, IRA or Keogh accounts, and other financial investments did not change between 1991 and x In 1993, median measured net worth varied from $5,786 (± $474) for the youngest households to $91,481 (± $3,736) for households in the 55-to-64-year-old category. It was $77,654 (± $4,510) for the oldest group (75 and over). Median measured net worth fell significantly from 1991 to 1993 for households in 35-to-44-year-old and 65-to-69-year-old categories. x In 1993, households with White householders had median measured net worth of $45,740 (± $1,307), households with Black householders had median measured net worth of $4,418 (± $697), and households with Hispanic-origin householders had a median measured net worth of $4,656 (± $681), which was not significantly different from that of Black households. x Married-couple households had the largest median measured net worth, $61,905 (± $1,614) in Both male- and female-maintained households had median measured net worth approximately one-fifth that of married-couple households in x Households headed by females experienced a decline in their median measured net worth, from $15,518 (± $1,506) (in 1993 dollars) in 1991 to $13,294 (± $1,112) in This decline was concentrated among female householders age 35 to 54. Acknowledgments This report was prepared under the direction of Kathleen S. Short, Chief, Poverty and Health Statistics Branch. Tables were prepared by Angela Feldman-Harkins, Chief, and Diana Lewis, Computer Programming and Applications Staff. Statistical assistance was provided by Bernadette Proctor. Word processing assistance was provided by Zana Colevas. General direction was provided by Charles T. Nelson, Assistant Division Chief (Economic Characteristics), Housing and Household Economic Statistics Division. Survey design and data operations were coordinated by Enrique J. Lamas, Chief, Income Surveys Branch, Demographic Surveys Division. Data processing activities were directed by Donna Riccini, Chief, Income Surveys Programming Branch, Demographic Surveys Division. Data collection was conducted by the Bureau of the Census interviewers under the overall direction of Michael J. Longini, Chief, Field Division. Sampling review was conducted by Vicki Huggins, Chief, Mark Hendrick, and Karen King, Survey of Income and Program Participation Branch, Statistical Methods Division. The staff of Administrative and Publications Services Division, Walter C. Odom, Chief, provided publication planning, design, composition, editorial review, and printing planning and procurement. Cynthia G. Brooks provided publication coordination and editing.

3 CURRENT POPULATION REPORTS Household Economic Studies P70-47 Issued September 1995 Asset Ownership of Households: 1993 The Survey of Income and Program Participation by T.J. Eller and Wallace Fraser U.S. Department of Commerce Ronald H. Brown, Secretary David J. Barram, Deputy Secretary Economics and Statistics Administration Everett M. Ehrlich, Under Secretary for Economic Affairs BUREAU OF THE CENSUS Martha Farnsworth Riche, Director

4 ECONOMICS AND STATISTICS ADMINISTRATION Economics and Statistics Administration Everett M. Ehrlich, Under Secretary for Economic Affairs BUREAU OF THE CENSUS Martha Farnsworth Riche, Director Bryant Benton, Deputy Director Paula J. Schneider, Principal Associate Director for Programs Nancy M. Gordon, Associate Director for Demographic Programs HOUSING AND HOUSEHOLD ECONOMIC STATISTICS DIVISION Daniel H. Weinberg, Chief SUGGESTED CITATION Eller, T.J., and Wallace Fraser, Asset Ownership of Households: 1993 U.S. Bureau of the Census. Current Population Reports, P70-47 U.S. Government Printing Office, Washington, DC, For sale by Superintendent of Documents, U.S. Government Printing Office, Washington, DC

5 iii Contents Page Highlights... 1 Introduction... 1 Measured Net Worth of Households... 3 Measured Net Worth by Income... 5 Measured Net Worth by Age... 6 Measured Net Worth by Race and Hispanic Origin... 8 Measured Net Worth by Type of Household User Comments FIGURES 1. Distribution of Measured Net Worth by Asset Type: Median Measured Net Worth by Age of Householder: TEXT TABLES A. Ownership Rates, Median Value of Asset Holdings, and the Distribution of Measured Net Worth by Asset Type: 1993, 1991, 1988, and B. Median Measured Net Worth and Distribution of Measured Net Worth by Monthly Household Income Quintiles: 1993 and C. Percent of Households Owning Assets and Median Value of Holdings by Monthly Household Income Quintile for Selected Asset Types: 1993 and D. Median Measured Net Worth by Age of Householder and Monthly Household Income Quintile: 1993 and E. Distribution of Measured Net Worth by Age of Householder and Asset Type: 1993 and F. Median Measured Net Worth by Race and Hispanic Origin of Householder and Monthly Household Income Quintile: 1993 and G. Median Measured Net Worth by Type of Household and Age of Householder: 1993 and APPENDIXES A. Definitions and Explanations... A1 Income Sources Included in Monthly Cash Income... A2 Assets and Liabilities Included in Net Worth... A2 B. Source and Accuracy of the Estimates... B1 Source of Data... B1 Weighting Procedure... B2 Accuracy of Estimates... B2 Use of Standard Errors... B3

6 iv APPENDIX TABLES B1. Household Sample Size by Month and Interview Status... B2 B CPS Coverage Ratios... B3 B3. Standard Errors of Ownership Rates, Median Value of Asset Holdings, and the Distribution of Measured Net Worth by Asset Type: 1993, 1991, 1988, and B5 B4 Standard Errors for the Median Measured Net Worth and Distribution of Measured Net Worth by Monthly Household Income Quintiles: 1993 and B5 B5. Standard Errors for Percent of Households Owning Assets and Median Value of Holdings by Monthly Household Income Quintile for Selected Asset Types: 1993 and B6 B6 Standard Errors for the Median Measured Net Worth by Age of Householder and Monthly Household Income Quintile: 1993 and B7 B7 Standard Errors for Distribution of Measured Net Worth by Age of Householder and Asset Type: 1993 and B8 B8 Standard Errors for the Median Measured Net Worth by Race and Hispanic Origin of Householder and Monthly Household Income Quintile: 1993 and B8 B9 Standard Errors for the Median Measured Net Worth by Type of Household and Age of Householder: 1993 and B9

7 1 Asset Ownership of Households: 1993 HIGHLIGHTS INTRODUCTION x Median net worth, as measured in the Survey of Income and Program Participation (SIPP), for househeld by U.S. households in The data are from the This report presents data on the assets and liabilities holds in 1993 was $37,587 (± $1,250), not significantly different from the 1991 median household net 1991 and 1992 panels of SIPP and represent informa- tion collected in February through May of worth of $38,500 (± $1,387) (in 1993 dollars).. While SIPP was designed primarily to provide estimates of x Median home equity for households whose house- income and government program participation, its asset holders owned their own homes increased between and liability data provide additional indicators of eco and 1993 from $43,070 (± $1,738) in 1991 (in nomic well-being. These data, collected on a regular 1993 dollars) to $46,669 (± $1,153) in basis in a supplement to the survey, are also useful for x During the period 1991 to 1993, there were declines modeling eligibility for government assistance programs. in the median values of interest-earning assets at A household s economic well-being depends on both financial institutions, other interest-earning assets, its income and its asset accumulation, often referred to rental property, vehicles, and businesses or profes- as its wealth. While income is the flow of resources to a sions. These declines were offset by increases in the household, wealth is the level of resources at any point median values of stocks and mutual fund shares, in time. Wealth, also called net worth, is a particularly home equity, and U.S. savings bonds. The median important dimension of well-being for some subgroups value of holdings in checking accounts, other real of the population such as the elderly, who tend to have estate, IRA or Keogh accounts, and other financial lower retirement incomes but higher asset holdings. 2 investments did not change between 1991 and This report looks at the value of interest-earning assets, of stocks and mutual fund shares, of real estate, x In 1993, median measured net worth varied from of mortgages held by sellers, and of motor vehicles, as $5,786 (± $474) for the youngest households to well as the self reported value of own businesses or $91,481 (± $3,736) for households in the 55-to-64- professions, held by households in the contiguous United year-old category. It was $77,654 (± $4,510) for the States. The report also examines the value of measured oldest group (75 and over). Median measured net worth, defined as the sum of measured assets less net worth fell significantly from 1991 to 1993 for measured liabilities such as debts secured by any asset, households in 35-to-44-year-old and 65-to-69-yearcredit card or store bills, bank loans, and other unseold categories. cured debts. x In 1993, households with White householders had Measuring wealth is more complex than measuring median measured net worth of $45,740 (± $1,307), income. The market value of some assets, such as that households with Black householders had median of a home, is difficult to determine precisely, on a regular measured net worth of $4,418 (± $697), and house- basis. The market value of other assets, such as stocks holds with Hispanic-origin householders had a median and bonds, varies over time, making point-in-time estimeasured net worth of $4,656 (± $681), which was mates of their value difficult. not significantly different from that of Black house- Some assets may be targeted for future consumption holds. and are thus excluded from the analysis in this report. x Married-couple households had the largest median For example, while life insurance policies generally have measured net worth, $61,905 (± $1,614) in Both male- and female-maintained households had 1 The reference point for the asset and liability questions was the median measured net worth approximately one-fifth last day of the 4-month reference period that preceded the interview. that of married-couple households in As a result, the 1993 data presented in this report are an average of balances held and owed at the end of the months of January, x Households headed by females experienced a decline February, March, and April 1993 and the 1991 data are the average of in their median measured net worth, from $15,518 balances held and owed for January, February, March, and April of (± $1,506) (in 1993 dollars) in 1991 to $13, See Daniel Radner, Measured Worth and Financial Assets of Age (± $1,112) in This decline was concentrated Groups in 1984, Social Security Bulletin, Volume 52, No. 3, March among female householders age 35 to , pp 2-15.

8 2 a cash surrender value, they are usually not sold. Other distribution, but less sensitive to outliers. Therefore, types of wealth, such as Social Security benefits or estimates of median measured net worth (measured equities in pension plans, have a value to the perspec- assets less measured debts) from the two surveys are tive recipient, but are not saleable. much closer than the estimates of mean measured net Finally, some assets, such as household durable worth. The 1993 SIPP estimate of measured median net goods are generally not considered subject to sale. worth was $37,587, and the 1991 SIPP estimate of Additionally, these assets are difficult to value and may measured median net worth was $38,500 (in 1993 have an intangible value not reflected in the market. dollars), 71 percent of the 1992 SCF estimate of median Therefore, this analysis does not cover equities in net worth of $53,800 (in 1993 dollars). pension plans, the cash surrender value of life insurance All demographic surveys, including SIPP, suffer from policies, or the value of jewelry and home furnishings. undercoverage of the population. This undercoverage results from missed housing units and missed persons Few household surveys provide information on asset within sample households. Compared to the level of the accumulation and debt holdings. The only other ongoing 1990 decennial census, overall SIPP undercoverage is survey that provides wealth information is the Survey of about 7 percent. Undercoverage varies with age, sex, Consumer Finances (SCF), conducted by the Federal and race. For some groups, such as 20 to 24 year old Reserve Board (FRB). 3 The SCF, which is designed Black males, the undercoverage is as high as about 27 specifically to analyze the financial portfolios of U.S. percent. It s important to note that the survey undercovfamilies, is much more detailed in the classification of erage is in addition to the decennial census undercovassets and liabilites than the SIPP. erage, which in 1990 was estimated to be about 1.5 Household surveys provide data on the asset and percent overall and about 8.5 percent for Black males. debt holdings of the population, but it should be noted The weighting procedures used by the Census Bureau that asset accumulation tends to be underreported in partially correct for the bias due to undercoverage. household surveys. Further, the distribution of asset However, its final impact on estimates is unknown. For accumulation is known to be highly concentrated among details, see appendix B. households with large asset holdings. The concentration Data for 1991, 1988, and 1984 were previously of asset accumulation and the paucity of observations published in Series P70-34, Household Wealth and for high-income households may bias various asset Asset Ownership: 1991, Series P70-22, Household Wealth accumulation statistics. and Asset Ownership: 1988, and Series P70-7, House- Specifically, we believe that SIPP provides biased hold Wealth and Asset Ownership: 1984, respectively. estimates of the aggregate of asset holdings and of The 1991 estimates reported here differ slightly from the mean amounts. The SIPP sample frame contains few estimates reported in the previous P70 report in two observations for high income households, while the SCF respects: makes a special attempt to survey respondents who are 1. There were minor changes in the processing syslikely to have high incomes or be wealthy. For example, tem. the 1993 SIPP estimated total aggregate net worth of 9.6 trillion dollars was 44 percent of the 21.8 trillion 2. The 1991 estimates published here are in 1993 dollars (in 1993 dollars) measured by the 1992 SCF. constant dollars. 5 The 1993 measured mean net worth estimated by the SIPP was $99,772, while the 1992 measured mean net This report presents data for 1993 and compares worth estimated from the SCF was $226,900 (in 1993 those estimates to 1991 data for certain household dollars). 4 characteristics. The medians of measured net worth by In the presence of this pattern of underreporting, household income, age of householder, race and ethmedian values are better indicators of the asset accu- nicity, and type of household, are analyzed for 1993 and mulation of typical households than are mean values The report also compares the 1993 and 1991 The distribution of measured wealth is skewed, with a data on ownership rates by asset type. Table A presents concentration of households at the low end of the historical data on ownership rates, the median value of distribution and a tail of households with high values. In asset holdings, and the distribution of measured net this case, the median is lower than the mean of the 5 The consumer price index rose 6 percent from the period represented by the 1991 data to the period represented by the 1993 data. 3 Therefore, the 1991 figures are converted to 1993 dollars by multiply- The precursor to the Survey of Consumer Finances was the ing by Survey of Financial Characteristics of Consumers conducted by the 6 Group quarters are excluded from the results shown in this Federal Reserve System in The Survey of Consumer Finances report. Group quarters are units which consist of unrelated individuals was conducted in 1983, 1986, 1989, and living together in housing units that have separate rooms but share See The Federal Reserve Bulletin, October 1994, Changes in common facilities such as dining halls. Individuals in group quarters Family Finances From 1989 to 1992: Evidence From the Survey of would not normally share financial resources. The universe also Consumer Finances, Arthur Kennickell and Martha Starr-McCluer. excludes persons in institutions and persons living in military barracks.

9 3 Table A. Ownership Rates, Median Value of Asset Holdings, and the Distribution of Measured Net Worth by Asset Type: 1993, 1991, 1988, and 1984 [Excludes group quarters] (in 1993 dollars) 1988 (in 1993 dollars) 1984 (in 1993 dollars) Asset type Percent of households that own asset type Median values of holdings for asset owners (dollars) Distribution of measured net worth Percent of Median house- values Distriholds of hold- bution that ings for of meaown asset sured asset owners net type (dollars) worth Percent of Median house- values Distriholds of hold- bution that ings for of meaown asset sured asset owners net type (dollars) worth Percent of Median house- values Distribuholds of hold- tion of that ings for meaown asset sured asset owners net type (dollars) worth All assets... Interest-earning assets at financial institutions.. Savings accounts... Money market deposit accounts... Certificates of deposit.. Interest-earning checking... Other interest-earning assets... Money market funds... Government securities. Corporate or municipal bonds... Other interest-earning assets... Checking accounts... Stocks and mutual fund shares... Own home... Rental property... Other real estate... Vehicles... Business or profession... U.S. savings bonds... IRA or Keogh accounts.. Other financial investments 1... (X) ,587 2,999 12, ,960 46,669 29,300 19,415 5,140 7, ,985 21, (X) ,500 3,709 16, ,490 43,070 31,270 20,140 5,555 10, ,886 19, (X) ,617 4,263 13, ,502 52,545 45,676 22,038 5,388 12, ,000 19, (X) ,411 4,262 13, ,410 56,430 48,033 20,559 5,705 8, ,679 17, X Not applicable. NA Not available because separate questions were not asked about the amount held in these individual assets. 1 Includes mortgages held from sale of real estate, amount due from sale of business, unit trusts, and other financial investments. collected in the SIPP. Assets covered include interest- earning assets, 7 stocks and mutual fund shares, real estate (own home, rental property, vacation homes, and land holdings), own business or profession, mortgages held by sellers, and motor vehicles. Liabilities covered include debts secured by any asset, credit card or store bills, bank loans, and other unsecured debts. The survey did not cover equities in pension plans, cash surrender value of life insurance policies, or the value of jewelry and home furnishings. The distribution of asset owner- ship, the median value of holdings for asset owners, and worth by asset type for 1993, 1991, 1988, and The standard errors associated with the data in this report are found in tables B3 through B9 of appendix B, which also describes statistical tests for comparison of estimates. MEASURED NET WORTH OF HOUSEHOLDS The median measured household net worth as measured in the SIPP in 1993 was $37,587; not statistically different from the 1991 median measured net worth of $38,500 (in 1993 dollars). Measured net worth is defined as the value of all assets covered in the survey less any debts about which information is 7 Interest-earning assets include regular savings accounts, money market deposit accounts, certificates of deposit, interest-earning check- ing accounts, money market funds, corporate or municipal bonds, U.S. Government securities, and other interest-earning assets.

10 4 Figure 1. Distribution of Measured Net Worth by Asset Type: 1993 Stocks and mutual fund shares 8.3% Checking accounts % Other interest-earning assets 4.0% Own home 44.4% Interestearning assets at financial institutions 11.4% Other 3.0% IRA/Keogh accounts 6.7% U.S. savings bonds % Business 6.4% Vehicles 6.4% Rental property 6.7% Other real estate 4.6% the percentage of total measured net worth held in each accounts, money market deposit accounts, certificates asset for 1993, 1991, 1988, and 1984 are shown in table of deposits, and interest-earning checking accounts) A. The percentage of total measured net worth held in declined between 1991 and In both, savings each asset in 1993 is shown graphically in figure 1. accounts were the most prevalent interest-earning asset Home equity constitutes the largest share of mea- held at financial institutions by households, but the sured net worth. In 1993, home ownership was reported ownership rate of savings accounts dropped from 62 by 64 percent of all households and accounted for 44 percent of households in 1991 to 60 percent in percent of total measured net worth, with owners having Other interest-earning assets, such as money market a median equity of $46,669 in their homes. Median funds and municipal bonds, made up 4 percent of home equity increased from $43,070 in 1991 to $46,669 measured net worth in 1993, a slight decrease from 5 in In 1991, 65 percent of all households owned percent in The median value of holdings in other homes and home equity accounted for 43 percent of interest-earning assets decreased from $16,058 in 1991 total measured net worth. There was no statistical (in 1993 dollars) to $12,998 in The ownership difference between the ownership rates in 1991 and rates of money market funds, government securities, The percentage of total measured net worth in corporate or municipal bonds, and other interest-earning home equity also remained unchanged between 1991 assets did not significantly change from 1991 to and The proportion of measured net worth in other real Interest-earning assets at financial institutions consti- estate declined from 5.4 percent in 1991 to 4.6 percent tuted the next largest share of measured net worth in in There was no significant change in the median both 1993 and The share of measured net worth value of holdings of other real estate between 1991 and held in interest-earning assets at financial institutions fell However, the ownership rate of other real estate from 14 percent of measured net worth in 1991 to 11 did decline between 1991 and 1993, from 1 percent percent in Additionally, both the ownership rate to 9.3 percent. The median value of holdings in other and the median value of interest-earning assets at real estate in 1993 was $19,415. financial institutions fell between 1991 and Seventy- Assets held as stocks and mutual fund shares, IRA one percent of households had interest-earning assets and Keogh accounts, and U.S. savings bonds accounted at financial institutions compared to 73 percent in for a larger share of measured net worth in 1993 than in The median amount of deposits decreased from $3, Specifically, the share of measured wealth held as in 1991 (in 1993 dollars) to $2,999 in stocks and mutual fund shares increased from 7.1 The ownership rates of all the components of the percent in 1991 to 8.3 percent in IRA and Keogh interest-earning assets at financial institutions (savings accounts made up 6.7 percent of measured net worth in

11 5 1993, an increase from 5.2 in The share held as MEASURED NET WORTH BY INCOME U.S. savings bonds increased slightly from to percent between 1991 and The median values of The distributions of measured net worth by income stocks and mutual funds and of U.S. savings bonds quintile for 1993 and 1991 are shown in table B. Income increased between 1991 and 1993, while the median is defined as the average monthly income received from value of IRA and Keogh accounts did not change. There all sources by all members of the household during the was no significant change in the ownership rates of 4-month period prior to the interview. Households are stocks and mutual funds, U.S. savings bonds, or IRA categorized by income quintile in 1993 and in and Keogh accounts between 1991 and The table shows a systematic relationship between measured net worth and income quintile. Median mea- The proportion of measured net worth held as check- sured net worth in 1993 increased significantly with ing accounts, rental property, vehicles, businesses or income, from $4,249 for households in the lowest quinprofessions, and other financial investments did not tile to $118,996 for households in the highest quintile. significantly change between 1991 and However, The distribution of measured net worth was highly there were significant declines in the ownership rates of skewed; the highest quintile owned 44.1 percent of total rental property, vehicles, and businesses and profes- measured net worth in 1993, while the lowest quintile sions between 1991 and The declines in the owned 7.2 percent. The distribution of measured net median value of rental property, vehicles, and busi- worth in 1993 by income quintile was not statistically nesses or professions between 1991 and 1993 were different from the 1991 distribution of measured net also statistically significant. worth by income quintile. 8 Asset ownership patterns and median asset values In 1993, 57.3 percent of households reported unsealso vary by income quintile, as shown in table C. Home cured liabilities, slightly lower than the 59.0 percent of ownership is a good example of this phenomena. In households that reported unsecured liabilities in , home ownership rate increased significantly with The median value of these liabilities was $2,210 in income from 42 percent for the lowest income group to 1993, not significantly different from the median value of 86 percent for the highest group. In 1991, the home $2,290 in In both, unsecured liabilities ownership rate was 44 percent for the lowest income represented 3.4 percent of net worth. group and 86 percent for the highest income group. Only In summary, there was no significant difference between the lowest quintile had a significant decrease in its home measured net worth from 1991 to However, there ownership rate between 1991 and were declines in the median values of interest-earning In 1993, median home equity increased between the assets at financial institutions, other interest-earning lowest and the highest income groups. Home equity for assets, rental property, vehicles, and businesses or professions. These declines were offset by increases in 8 These figures are biased by significant underreporting by highthe median values of stocks and mutual fund shares, income households. The 1989 Survey of Consumer Finances, which home equity, and U.S. savings bonds. The median employed a sample designed to capture wealthy households, estivalues of holdings in checking accounts, other real mated that the highest income quintile owned 64.9 percent of total measured worth in 1989, while the lowest quintile owed 3.4 percent. estate, IRA or Keogh accounts, and other financial The measured worth and income concepts were similar in the two investments did not change between 1991 and surveys, but not exactly equivalent. Table B. Median Measured Net Worth and Distribution of Measured Net Worth by Monthly Household Income Quintiles: 1993 and 1991 [Number of households in thousands] (in 1993 dollars) Monthly household income quintiles 1 Number of households Median measured net worth (dollars) Distribution of measured net worth Number of households Median measured net worth (dollars) Distribution of measured net worth Total... 96,468 37,587 94,692 38,500 Lowest quintile... Second quintile... Third quintile... Fourth quintile... Highest quintile... 19,327 19,306 19,279 19,304 19,251 4,249 20,230 30,788 50, , ,977 18,912 18,969 18,928 18,905 5,406 20,315 30,263 51, , Quintile upper limits for 1993 were: lowest quintile $1,071; second quintile $1,963; third quintile $2,995; fourth quintile $4,635. Upper limits for 1991 were: lowest quintile $1,135; second quintile $2,027; third quintile $3,089; fourth quintile $4,721.

12 6 Table C. Percent of Households Owning Assets and Median Value of Holdings by Monthly Household Income Quintile for Selected Asset Types: 1993 and 1991 [Excludes group quarters] Monthly household income quintiles 1 Interestearning assets at financial institutions 2 Other interestearning assets 3 Stocks and mutual fund shares Equity in own home Equity in motor vehicles Equity in own business or profession IRA or Keogh accounts PERCENT OF HOUSEHOLDS OWNING ASSETS 1993 Total... Lowest quintile... Second quintile... Third quintile... Fourth quintile... Highest quintile Total... Lowest quintile... Second quintile... Third quintile... Fourth quintile... Highest quintile MEDIAN VALUE OF HOLDINGS FOR ASSET OWNERS 1993 (dollars) Total... Lowest quintile... Second quintile... Third quintile... Fourth quintile... Highest quintile... 2,999 1,594 1,999 1,998 2,747 5,999 12,998 9,999 12,999 12,499 9,999 14,999 6,960 3,300 4,916 4,650 5,900 9,992 46,669 38,940 40,973 42,984 41,850 66,068 5,140 1,657 3,348 4,625 6,491 9,898 7, ,980 4,800 9,500 17,075 12,985 10,000 11,000 9,500 11,800 16, (in 1993 dollars) Total... Lowest quintile... Second quintile... Third quintile... Fourth quintile... Highest quintile... 3,709 2,468 2,624 2,384 3,179 7,738 16,058 6,571 15,900 14,205 15,899 20,140 5,490 4,081 3,988 5,062 3,816 9,010 43,070 36,040 41,340 37,100 41,870 63,494 5,555 1,555 3,533 4,872 6,935 10,017 10,203 6,360 5,088 4,770 10,176 15,928 11,886 8,372 8,904 10,562 10,388 15,370 1 Quintile upper limits for 1993 were: lowest quintile $1,071; second quintile $1,963; third quintile $2,995; fourth quintile $4,635. Upper limits for 1991 were: lowest quintile $1,135; second quintile $2,027; third quintile $3,089; fourth quintile $4, Includes passbook savings accounts, money market deposit accounts, certificates of deposits, and interest-earning checking accounts. 3 Includes money market funds, U.S. Government securities, municipal and corporate bonds, and other interest-earning assets. the lowest income group in 1994 was $38,940, while that stable between 1991 and In the highest quintile, of the highest income group was $66,068 in between 1991 and 1993, the proportion of households Median home equity values increased significantly from owning interest-earning assets at financial institutions, 991 for the low- and middle-income quintiles. The sec- other interest-earning assets, and vehicles declined ond, fourth, and fifth quintiles did not have significant slightly. changes in the median home equity values between 1991 and Other assets with large differences in ownership rates MEASURED NET WORTH BY AGE between the lowest and highest income groups in 1993 Age is correlated with measured net worth because were stocks and mutual fund shares (4 to 44 percent), increasing age offers an increasing opportunity to accu- IRA or Keogh accounts (5 to 47 percent), and business mulate wealth. Median values of measured net worth by equity (6 to 19 percent). Within quintiles, the proportion household income quintile and age of the householder of households owning various assets remained fairly are shown in table D and graphically in figure 2. The

13 7 Table D. [Excludes group quarters] Median Measured Net Worth by Age of Householder and Monthly Household Income Quintile: 1993 and 1991 Monthly household income Total Less than to to to 64 Total 65 and over 65 to to and over 1993 All households (thousands)... 96,468 37,587 9,505 24,361 5,786 3,297 22,790 29,202 8,219 16,258 57,755 14,499 12,291 91,481 25,108 20,768 86,324 20,642 6,132 92,500 23,650 5,504 95,748 23,054 9,131 77,654 18,125 Measured Net Worth by Income Quintile 1 Lowest quintile: 19,327 4, , , ,972 3, ,231 16,900 1,900 7,059 30,400 2,993 1,560 34,413 2,499 1,600 24,373 2,142 3,899 32,149 3,499 Second quintile: 19,306 20,230 4,999 5,201 2,837 1,595 3,516 4,742 1,975 2,272 15,524 3,100 2,310 57,075 11,805 6,006 80,975 20,624 1,692 72,587 16,742 1,674 83,848 20,691 2,641 84,633 22,883 Third quintile: 19,279 30,788 8,283 5,659 6,993 4,057 4,795 17,315 5,325 2,847 37,413 7,475 2,306 86,405 23,099 3, ,554 53,870 1, ,589 44,410 1, ,230 53,675 1, ,499 67,049 Fourth quintile: 19,304 50,000 15,088 5,096 15,872 7,700 5,723 40,857 12,305 3,686 62,031 16,732 2, ,278 38,800 2, ,581 93, ,861 85, ,664 83, , ,650 Highest quintile: 19, ,996 45,392 3,251 38,449 17,467 5,846 91,349 35,200 5, ,525 51,162 3, , ,389 1, , , , , , , , , (in 1993 dollars) All households (thousands)... Median measured worth (dollars)... 94,692 38,500 10,858 25,031 5,893 3,427 21,514 33,027 9,938 14,934 61,532 16,697 12,575 88,073 27,221 20,638 94,074 27,400 6, ,473 35,270 5,439 97,863 27,285 8,764 80,636 24,380 Measured Net Worth by Income Quintile 1 Lowest quintile: 18,977 5,406 1,059 5, ,271 1, ,901 5, ,323 17,782 1,272 7,226 33,523 3,710 1,657 31,800 2,649 1,630 33,230 3,101 3,939 33,601 4,823 Second quintile: 18,912 20,315 5,934 5,432 3,087 1,819 3,231 6,518 2,364 1,958 20,654 4,783 2,431 56,275 10,945 5,860 95,718 30,711 1,760 97,492 26,543 1,526 94,392 27,216 2,574 94,139 36,226 Third quintile: 18,971 30,263 9,204 5,809 7,080 4,055 4,474 19,398 6,016 2,629 37,643 10,083 2,536 80,949 25,330 3, ,732 72,663 1, ,831 68,052 1, ,694 66,081 1, ,689 85,490 Fourth quintile: 18,927 51,779 17,135 5,105 17,023 8,114 5,607 40,834 12,990 3,432 60,381 16,423 2, ,850 46,019 2, , , ,059 86, , , , ,746 Highest quintile: 18, ,423 51,702 3,429 45,509 19,991 5,931 96,450 38,086 5, ,279 56,180 2, ,226 98,289 1, , , , , , , , ,986 1 Quintile upper limits for 1993 were: lowest quintile $1,071; second quintile $1,963; third quintile $2,995; fourth quintile $4,635. Quintile upper limits for 1991 were: lowest quintile $1,135; second quintile $2,027; third quintile $3,089; fourth quintile $4,721.significantly from

14 8 Figure 2. Median Measured Net Worth by Age of Householder: 1993 $5,786 $29,202 $57,755 $91,481 $92,500 $95,748 $77,654 Under to to to to to and older results show the expected relationship between age and measured net worth. Median measured net worth increased significantly from $5,786 for the youngest households to $91,481 for households with householders in the 55-to- 64-year-old category and then declined to $77,654 for the oldest group (75 and over). 9 Median measured net worth fell significantly from 1991 to 1993 for households in 35-to-44-year-old and the 65-to-69-year-old categories. Median measured net worth excluding home equity is considered an important indicator of well-being for some subgroups of the population, such as the elderly, who tend to have larger proportions of measured net worth in their homes than do younger people. Median measured net worth excluding home equity increased with age for all age groups under 65 and declined for households with householders age 65 and over. Among households with householders age 65 and over, households with householders age 75 and over had the lowest measured net worth. In 1993, the median measured net worth of households with householders age 75 and older was $18,125 compared with the median measured net 9 Cross-sectional evidence of the life-cycle relationship between measured worth and age, however, does not imply the same behavior for an individual over a lifetime. Such evidence is based on average measured worth holdings for different age cohorts at a point in time. If the cohorts have different lifetime measured worth profiles, it is possible to observe cross-sectional evidence of a life-cycle relationship between measured worth and age when, in fact, measured worth increases over the lifetime of each cohort. worth of $23,642 for all households with a householder age 65 or older. (There was no significant difference in median measured net worth excluding home equity between households with householders age 65 to 69 and those age 70 to 74.) Median measured net worth excluding home equity fell from $10,858 in 1991 (in 1993 dollars) to $9,505 in During the period 1991 to 1993, median measured net worth excluding home equity fell for all householder age categories, except for householders less than 35 of age, those 55-to-64- of age, and those 70-to-74- of age. The distribution of measured net worth by age for 1991 and 1993 is shown in table E. In both, home equity was the major asset holding for all age groups. It is evident that the composition of measured net worth differs by the age of the householder. The share of measured net worth held as equity in motor vehicles declined with increasing age for both, from 18 percent of measured net worth for the youngest group to 4 percent for the 65 or older group in The share of measured net worth held as assets in businesses or professions also declined in both for householders age 55 or more. The share of measured net worth from some asset types, however, increased between the youngest and oldest groups. For example, the proportion of measured net worth in interest-earning assets at financial institutions increased significantly from 11 percent of measured net worth for the youngest group to 17 percent for households with householders 65 or older in In 1991, the proportion of measured net worth in interestearning assets at financial institutions varied from 12 percent for households with householders less than 35 of age to 21 percent for households with householders 65 of age or more. Between 1991 and 1993, the proportion of measured net worth in interestearning assets at financial institutions declined for households headed by householders 35 old and older. MEASURED NET WORTH BY RACE AND HISPANIC ORIGIN Measured net worth holdings also differed by race and ethnicity of the householder. 10 Table F shows median measured net worth by race and Hispanic origin. There were large differences in wealth holdings between White households and other groups. In 1993, White households had a median measured net worth of $45,740, while the figure for Black households was $4,418. Hispanic households had median holdings of $4,656. (The median measured net worth of Black households and those of Hispanic origin were not significantly different.) 10 Information on the Hispanic population shown in this report was collected in the 50 States and the District of Columbia and, therefore, does not include residents of Puerto Rico.

15 9 Table E. Distribution of Measured Net Worth by Age of Householder and Asset Type: [Excludes group quarters] 1993 and Asset type Total Less than to to to and over Total Less than to to to and over Total measured net worth... Interest-earning assets at financial institutions... Other interest-earning assets... Checking accounts... Stocks and mutual fund shares... Own home... Rental property... Other real estate... Vehicles... Business or profession... U.S. savings bonds... IRA or Keogh accounts... Other financial investments 1... Unsecured liabilities Includes mortgages held from sale of real estate, amount due from sale of business, unit trusts, and other financial investments. 2 Since net worth is the value of assets less liabilities, unsecured liabilities are subtracted from the distribution of net worth and are shown as negative. Table F. Median Measured Net Worth by Race and Hispanic Origin of Householder and Monthly Household Income Quintile: 1993 and 1991 [Excludes group quarters] Total White Black Hispanic origin 1 Monthly household income quintile (in 1993 dollars) (in 1993 dollars) (in 1993 dollars) 1991 (in dollars) All households (thousands)... Median measured net worth (dollars)... 96,468 37,587 94,692 38,500 82,190 45,740 81,409 47,075 11,248 4,418 10,768 4,844 7,403 4,656 6,407 5,557 Measured Net Worth by Income Quintile 2 Lowest quintile: 19,327 4,249 18,977 5,406 14,662 7,605 14,480 10,743 4, , , , Second quintile: 19,306 20,230 18,912 20,315 16,162 27,057 16,006 26,665 2,663 3,406 2,436 3,446 1,760 2,900 1,557 3,214 Third quintile: 19,279 30,788 18,969 30,263 16,591 36,341 16,388 35,510 2,126 8,480 2,124 8,302 1,437 6,313 1,312 7,501 Fourth quintile: 19,304 50,000 18,928 51,779 17,218 54,040 17,043 55,950 1,454 20,745 1,353 21,852 1,115 20,100 1,009 20,564 Highest quintile: 19, ,996 18, ,423 17, ,350 17, , , , , ,168 1 Persons of Hispanic origin may be of any race. 2 Quintile upper limits for 1993 were: lowest quintile $1,071; second quintile $1,963; third quintile $2,995; fourth quintile $4,635. Upper limits for 1991 were: lowest quintile $1,135; second quintile $2,027; third quintile $3,089; fourth quintile $4,721.

16 10 Table G. Median Measured Net Worth by Type of Household and Age of Householder: 1993 and 1991 [Excludes group quarters] Type of household by age of householder Median measured net worth (dollars) Median measured net worth (in 1993 dollars) Number of Excluding Number of Excluding households equity in households equity in (thousands) Total own home (thousands) Total own home Married-couple households... 52,891 61,905 17,051 52,616 63,599 19,557 Less than ,141 12,941 5,677 12,247 12,702 5, to ,983 61,874 17,436 23,080 64,047 19, to , ,752 43,543 7, ,138 47, and over... 9, ,790 44,410 9, ,517 59,200 Male householders... 15,397 13,500 5,157 15,297 12,698 5,963 Less than ,285 4,300 2,890 5,746 5,027 3, to ,157 18,426 6,156 5,409 18,391 7, to ,437 44,670 10,905 1,514 32,330 5, and over... 2,518 60,741 12,927 2,627 69,157 17,489 Female householders... 28,180 13,294 3,363 27,179 15,518 3,762 Less than ,935 1, ,038 1, to ,908 8,405 2,652 7,959 11,294 3, to ,286 44,762 6,475 3,211 41,635 6, and over... 9,050 57,679 9,560 8,972 62,746 13,015 Table F also shows median measured net worth by measured net worth of Hispanic households was not income quintile, race, and Hispanic origin. White house- significantly different from that of Black households in holds in every income quintile had significantly higher every income quintile in both 1991 and 1993, except for levels of median measured net worth than Black house- the first income quintile in holds in the same income quintile in 1993 and in In the lowest quintile in 1993, the median measured net worth for White households was $7,605 while that of MEASURED NET WORTH BY TYPE OF Black households in this quintile was significantly lower HOUSEHOLD ($250). In the highest quintile in 1993, the median measured net worth for White households was $123,350, The measured net worth of married-couple, femalesignificantly higher than the median for Black house- and male-maintained households by age of the households in the highest quintile ($45,023). holder for 1991 and 1993 is shown in table G. Married- The median measured net worth of each racial group couple households were the largest category of housedid not change between 1991 and 1993, except for holds and, overall, had the largest median measured net White householders and Black householders in the worth in both ($61,905 in 1993 and $63,599 in lowest income quintile. The median measured net worth 1991). Households headed by married couples age 65 of White households in the first income quintile declined and over experienced a statistically significant decline in from $10,743 (in 1993 dollars) in 1991 to $7,605 in their median measured net worth, from $142,517 (in The measured net worth of Black householders in the 1993 dollars) in 1991 to $129,790 in However, lowest income quintile increased from $0 in 1991 to there was no change between 1991 and 1993 in the $250 in Other apparent differences in the esti- median measured net worth of all married-couple housemates of measured net worth over time for the other holds. race and ethnicity categories were not statistically sig- Households headed by females experienced a decline nificant. in their median measured net worth, from $15,518 (in The median measured net worth of Hispanic house dollars) in 1991 to $13,294 in This decline holds was lower than that of White households in every was concentrated among female householders age 35 income quintile in both 1991 and The median to 54 as this was the only age group of female-headed householders that showed a statistically significant decline 11 The 1991 estimate of measured net worth for Black households in in median net worth between 1991 and The the first income quintile median is the result of half (or more) of Black median net worth of male-headed households was households in the lowest quintile having measured net worth that is either negative or essentially zero; some Black households in this lowest $13,500 in 1993, not significantly different from the 1991 income quintile have positive measured net worth. estimate of $12,698 (in 1993 dollars). There was no

17 11 statistically significant difference between male-maintained measured net worth in 1993 was that of female houseand female-maintained household median measured holders under 35 of age ($1,342). net worth in 1993, though they were significantly different in Both male- and female-maintained households had median measured net worth approximately USER COMMENTS one-fifth that of married-couple households in When measured net worth levels are compared within We are interested in your reaction to the usefulness age groups, households maintained by women less than and content of this report. We welcome your recommen- 55 of age had a lower median measured net worth dations. If you have any suggestions or comments, than their male-maintained counterparts in There please send them to: was no statistically significant difference between the Dr. Daniel H. Weinberg median measured net worth of households maintained Chief, Housing and Household Economic by females age 55 to 64 and males age 55 to 64 in Statistics Division However, in 1991, there was a significant difference. U.S. Bureau of the Census Overall, the age and household group with the lowest Washington, DC

18 A1 Appendix A. Definitions and Explanations indicated that their origin was Mexican, Puerto Rican, Cuban, Central or South American, or some other Hispanic origin. It should be noted that persons of Hispanic origin may be of any race. Monthly income. The monthly income estimates shown in this report for households are based on the sum of the monthly income received by each member of the house- hold age 15 old or over at the date of interview. The figures represent the average monthly amounts received by households during the appropriate 4-month reference period for each rotation group. To calculate the monthly income figures, the composition of the household was fixed at the date of the interview and the total cash income of household members 15 and older for the 4-month reference period was divided by four. The cash income concept used in this report includes the sum of all income received from any of the sources listed under Income Sources Included in Monthly Cash Income. Rebates, refunds, loans, and capital gain or loss amounts from the sale of assets, and interhouse- hold transfers of cash such as allowances are not included. Accrued interest on individual retirement accounts (IRA s), Keogh retirement plans, and U.S. savings bonds are also excluded. This definition differs somewhat from that used in the annual income reports based on the March CPS income supplement questionnaire. The data in those reports, published in the Consumer Income Series, P60, are based only on income received in a regular or periodic manner and, therefore, exclude lump- sum or one-time payments, such as inheritances, or insurance settlements. The March CPS income defini- tion also excludes those same income sources excluded by SIPP. The income amounts represent amounts actu- ally received during the 4-month reference period, before deductions for income and payroll taxes, union dues, Part B medicare premiums, etc. Measured net worth. The household measured net worth estimates shown in this report are based on the sum of the market value of assets owned by every member of the household minus liabilities (secured or unsecured) owed by household members. The esti- mates represent the net worth of households as of the end of the appropriate reference period. The measured net worth concept is based on the value of all assets minus all liabilities listed under Assets and Liabilities Included in Net Worth. The major assets not covered in Population coverage. The estimates in this report are restricted to the civilian, noninstitutional population of the United States and members of the Armed Forces living off post or with their families on post. The estimates exclude group quarters. Householder. Survey procedures call for listing first the person (or one of the persons) in whose name the home is owned or rented as of the interview date. If the house is owned jointly by a married couple, either the husband or the wife may be listed first, thereby becoming the reference person, or householder, to whom the relationship of the other household members is recorded. One person in each household is designated as the householder. The number of householders, therefore, is equal to the number of households. Household. A household consists of all persons who occupy a housing unit. A house, an apartment or other group of rooms, or a single room is regarded as a housing unit when it is occupied or intended for occupancy as separate living quarters; that is, when the occupants do not live and eat with any other persons in the structure and there is either (1) direct access from the outside or through a common hall or (2) a kitchen or cooking equipment for the exclusive use of the occupants. For this report, the household composition was determined as of the interview date. A household includes the related family members and all the unrelated persons, if any, such as lodgers, foster children, wards, or employees who share the housing unit. A person living alone in a housing unit or a group of unrelated persons sharing a housing unit as partners is also counted as a household. The count of households excludes group quarters. Examples of group quarters include rooming and boarding houses, college dormitories, and convents and monasteries. Race. The population is divided into three groups on the basis of race: White, Black, and other races. The last category includes American Indians, Asian/Pacific Islanders, and any other race except White and Black. Persons of Hispanic origin were determined on the basis of a question that asked for self-identification of the person s origin or descent. Respondents were asked to select their origin (or the origin of some other household member) from a flash card listing ethnic origins. Persons of Hispanic origin, in particular, were those who

19 A2 this report are equities in pension plans, cash value of life insurance policies, and value of homefurnishings and jewelry. These items were not covered because it is particularly difficult to obtain reliable estimates of the value of these assets in a household survey. Median net worth. The median net worth is the amount which divides the net worth distribution into two equal groups, one having household net worth less than that amount and the other having net worth above that amount. INCOME SOURCES INCLUDED IN MONTHLY CASH INCOME Earnings From Employment Wages and salary Nonfarm self-employment income Farm self-employment income Income From Assets (Property Income) Regular/passbook savings accounts in a bank, savings and loan, or credit union Money market deposit accounts Certificates of deposit NOW, Super NOW, or other interest-earning checking accounts Money market funds U.S. Government securities Municipal or corporate bonds Other interest-earning assets Stocks or mutual fund shares Rental property Mortgages Royalties Other financial investments Other Income Sources Social security U.S. Government railroad retirement Federal supplemental security State administered supplemental security income State unemployment compensation Supplemental unemployment benefits Black lung payments Workers compensation State temporary sickness or disability benefits Employer or union temporary sickness policy Payments from a sickness, accident, or disability insurance policy purchased by individual Aid to Families with Dependent Children (AFDC), (ADC) General assistance or general relief Indian, Cuban, or refugee assistance Foster child care payments Other welfare Child support payments Alimony payments Pensions from a company or union Federal civil service or other Federal civilian employee pension U.S. military retirement National Guard or Reserve Forces retirement State government pensions Local government pensions Income from paid-up life insurance policies or annuities Estates and trusts Other payments for retirement, disability or survivors, and G.I. Bill/VEAP education benefits Income assistance from a charitable group Other unemployment compensation (e.g., Trade Adjustment Act benefits, strike pay, other) Veterans compensation or pensions Money from relatives or friends Lump sum payments Income from roomers or boarders National Guard or Reserve pay Incidental or casual earnings Other cash income not included elsewhere ASSETS AND LIABILITIES INCLUDED IN NET WORTH Assets Interest-earning assets held at financial institutions Passbook savings account Money market deposit accounts Certificates of deposit Interest-earning checking accounts Other interest-earning assets Money market funds U.S. Government securities Municipal or corporate bonds Other interest-earning assets Stocks and mutual fund shares Rental property Mortgages held for sale of real estate Amount due from sale of businesses or property Regular checking accounts U.S. savings bonds Home ownership Vacation homes and other real estate IRA and Keogh accounts Motor vehicles Other financial assets Liabilities Secured liabilities Margin and broker accounts Mortgages on own home Mortgages on rental property Mortgages on other homes or real estate Debt on businesses or professions Vehicle loans

20 A3 Unsecured liabilities Credit card and store bills Doctor, dentist, hospital, and nursing home bills Loans from individuals Loans from financial institutions Educational loans Other unsecured liabilities